Hindsight is 20-20, so as we look back now it would be easy to say that we foresaw exactly how the pay-TV landscape would change when we hung out the OpenVault shingle a decade ago. But we have to admit, the enormity and speed of the video transformation kind of took us by surprise.
From our perch as a provider of tools for managing broadband networks, we’ve had a bird’s-eye view of how the video subscription declines that began with a trickle in 2010 have turned into a torrent. We’ve seen total U.S. pay-TV subscribers plunge by 17% in the past six years alone. The smart folks at MoffettNathanson say another 40% is at risk to cut the cord over the next five years.
With Netflix, Amazon and others upending viewing paradigms and Disney, Apple and new entrants flexing their streaming muscles, the impact on cable and telecom infrastructures has been monumental. As the number of subscribers who have terminated their traditional video subscriptions has climbed toward 20 million, operators have lost monthly recurring set-top box rental and video package revenue. At the same time, cord cutters’ skyrocketing broadband consumption – now well past the 500 GB/month mark – increasingly is taxing operators’ networks and customer support systems.
It was only a matter of time before the broadband tail would wag the cable dog. Over the past year, Comcast and Charter have introduced video streaming packages that are shifting emphasis from traditional pay-TV to broadband services. Even more important in our view are “Broadband First” strategies that have been pioneered by operators such as Cable One; under its “Sparklight” brand, Cable One grew broadband-only subscribers to 70% of its customer base last year, fueling record ARPU and margins.
With Cable One mindful of acquisition opportunities and other operators eyeing their success, we’d like to offer a couple of thoughts: First, 2020 will be the year when the Broadband First footprint gains significant new traction in North America – and perhaps beyond. And second, operators need to be mindful of how the transition to Broadband First will impact all aspects of their businesses, including – but not limited to – network engineering and operators, sales and marketing, and customer support.
Over the next several months, we’ll be using the insights we’ve gleaned from a decade of supporting cable and telecom networks to help the industry roadmap the shift to Broadband First strategies. We’ll discuss what operators can do to increase visibility into the network and the home device ecosystem, the importance of educating consumers on the need to align broadband packages with usage needs, and the value of arming customer support teams with information that will increase retention rates at inflection points in the subscriber relationship.
While no one could foresee exactly how things would play out a decade ago, we have a clear vision today of what’s over the horizon and are arming the industry with the technology solutions and data analytics expertise needed for success. Stay tuned to this space in the months ahead to learn more about how Broadband First can drive cable and telecom into the future.